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Data I/O Corp. Reports Operating Results (10-Q)

November 15, 2010 | About:
10qk

10qk

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Data I/O Corp. (DAIO) filed Quarterly Report for the period ended 2010-09-30.

Data I/o Corp. has a market cap of $49.77 million; its shares were traded at around $5.52 with a P/E ratio of 21.23 and P/S ratio of 2.68. DAIO is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

We took restructuring actions in 2008 totaling $542,000, primarily severance-related, and additional actions in 2009 totaling $203,000 to flatten and streamline the organization, as well as reducing cost, by decreasing the size of our Board and abandoning a portion of our building space. At September 30, 2010, $83,000 remains accrued and is scheduled to be fully paid out during 2010 and 2011.

Revenue increased to $6.6 million for the third quarter of 2010, an increase of $1.3 million or 24.2% compared to the third quarter of 2009 and essentially flat compared to $6.6 million for the second quarter of 2010. We experienced a revenue increase of 102% in Asia, while Europe and the Americas decreased by 4% and 6%, respectively, compared to the third quarter of 2009. Revenue increased across all of our major product lines from the third quarter of 2009. Our PS Family and FLX lines, in particular, benefited from growth in demand during the quarter. Revenues also continued to benefit from the introduction of our new FlashCORE III technology into our major product lines, as customers sought a better solution to cope with the increasing use of very high-density Flash memory. The backlog of orders totaled $1.7 million at the end of the third quarter of 2010, an increase compared to the backlog of $876,000 at September 30, 2009 and $1.4 million at the end of the second quarter of 2010. Deferred revenue also increased by $528,000 during the third quarter, primarily related to one large PS system that was shipped and invoiced during the quarter but recorded in deferred revenue due to customer installation and acceptance requirements.

Research and development (R&D) spending for the third quarter of 2010 decreased by approximately $98,000 compared to the third quarter of 2009 and by $228,000 for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009, primarily due to the transfer of development costs associated with software contract revenues to operations. R&D as a percentage of net sales also decreased, primarily due to increased sales volume in combination with the transfer of development costs to operations during 2010. New products include enhancements to FlashCORE III, our new programming architecture, and the new versions of ProLINE RoadRunner for Siemens and MyData placement machines.

Selling, general and administrative (SG&A) expenses increased approximately $335,000 for the third quarter of 2010 compared to the third quarter of 2009 and $965,000 for the nine month period ended September 30, 2010 compared to the nine month period ended September 30, 2009. This was due primarily to higher commission expense related to the higher sales volume as well as higher incentive and other compensation expense in 2010 compared to 2009.

Income tax expense recorded for the third quarter and first nine months of 2010 and 2009 resulted from foreign and state taxes. The effective tax rate differed from the statutory tax rate primarily due to the effect of valuation allowances and state taxes. Data I/O has a valuation allowance of $9,068,000 as of September 30, 2010. Our deferred tax assets and valuation allowance are reduced by approximately $94,000 associated with the requirements of accounting for uncertain tax positions as of September 30, 2010.

During the third quarter of 2006, the Company entered into a five-year capital lease agreement in the amount of $591,145. The lease was used to fund new equipment and installation associated with our move to the new facility in July of 2006. Amounts shown exclude current portion of long-term debt in the amounts of $126,000 and $132,000 for the periods ending September 30, 2010 and December 31, 2009, respectively. See Note 9, Long-Term Debt.

Read the The complete Report

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